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tv   Worldwide Exchange  CNBC  December 31, 2013 4:00am-6:01am EST

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hello. you're watching "worldwide exchange." i'm ross westgate. your headlines today from around the globe, happy new year. stocks celebrate a stellar 201. the dow closing at its 51st record high this year, the most since '95. the nikkei up 57%. dollar/yen, on track for the biggest yearly gain since '79. but on the losing side, gold, its worst year in three decades, down 28%.
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angela merkel among the well wisher for world champion f1 michael schumacher following his operation on a serious brain injury. and a fiery train collision in the united states forces the evacuation in a small town. the latest in a string of concerns about oil by rail traffic. and a warm welcome to the last trading day of 2013. and investors, certainly stock investors might be sorry to say good-bye to this year. it's been quite a stellar year. this won't be the most important trading day of the year, probably the least important trading day of the year. some markets some closinged.
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japan closed yesterday. germany, switzerland, ireland, athens closed yesterday, as well. right now on the stoxx 600, premature, advancers outpace decliners around 6 to 4. this is where we stand at the moment. the ftse 100 is up 18 points. if you look at the annual figures in a few moments, the cac 40 is up 0.2%. the ibex is fairly flat. this is what asia markets have done today. the nikkei closed yesterday, as well. the shanghai composite up 0.8%. the hang seng up 0.25%. the s&p/asx 200 is fairly flat. dollar/yen, we hit that five-year low of 105.41 on friday. we're just above 105 at the moment. we've had the biggest gains since 1979 for the dollar against the yen. up 21% this year.
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euro/dollar, 1.3765. 11.3894 is that five-year high that we hit on friday. the 26-month high we hit on euro/dollar. and sterling/dollar, is 1.6527 not far away from its highest levels since august 2011. let's take a look at u.s. equity this year. it hasn't been a bad performance. the dow jones industrial average up some 26% so far. we've had our 511th record close last night, the best year since 196. it's been up all four quarters this year, the first time that's happened since 1997, as well. the ftse 100, a lagger, really, up from 15% over the course of the year. the msci, up from 22%.
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you can see how it's been weighed down by basic resources. the dax up some 25%. autos, media, telecoms all doing fairly well. the cac 40 up some 17% and the ftse mib up some 116.5%. the stand out, of course, has been japan, the nikkei over the course of the year up some 56%. shanghai, down 6%. the hang seng doing nothing up 2% and the the s&p/asx up 15%, as well. let's show you the yen. it's been the weakest performer out of the g-10 currencies. the dollar up some 21% over the course of the year. and euro this year, as well. euro/dollar, up some 4% this year against the dollar, which some people mivend surprise iin
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finally, take a look at gold. it's the worst annual loss for gold since 1981, currently down some 28% on the year. so that's some of the major performances from the different asset classes. so that sets us up for the show today. i'm very happy we have our next guest. allen, nice to see you, allen capper, credit strategist. delighted to have you on board. what is interesting about all of those performances, there's one asset class that's done absolutely nothing, it's oil. >> yes. >> brent is pretty flat on the year. you know, i just mention that because we've had stellar gains
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and losses, treasuries down, i think treasuries are the worst since 1973. lots of movement apart from the oil complex. >> i think in part because investors were very, very focused upon commodities for about mid 2000s up until the nasty period from 2007. they kind of backed off because aussie prices backed off. now there's a huge amount of capacity surrounding where they go over the coming two or three years. i don't think that's really focused upon where they might go over the next -- >> no. and i supposed with oil, as well, brent supply fears have been outweighed by weak demand. so we'll see what happened. in the bond space, we're all -- we've got treasury yields up near 3%, around that sort of space. how are we going to be impacted, do you think, by different
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republicanal in yields coming ahead in 2014 as the fed tapers and the rising cost of u.s. money? >> this is the key question. and people keep asking, what about the fed taper? i think to some extent the market knows about that. i'm quite comfortable. that in and of itself is not the main factor to focus upon. the key variable here is what is going to happen in europe. right now, the ecb has been shrinking its balance sheets. in other words, the ecb has been withdrawing from the special monetary measures just like the fed, but the markets never really noticed. whys has the market not noticed? right across europe, particularly the funds, they're actually increasing their weight toes fixed income. my sense is that trend we've seen in the latter part of 2013 will continue in 2014.
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why? because when yields go higher, it means they want to lock into those better rates. we don't see that trend in the u.s. my sense, therefore, is we could see an outperformance of fixed european income over the early part of next year. >> which is kind of interesting. is there a point? if u.s. yields rise further or quicker, will that be more on destabilizing? is it going to rise gradually? >> if that were to be the case, we would have seen yields a lot more volatile in the second half of 2013 and they weren't. my sense is probably around april or may, that was the fiscal period. it is now over.
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the policy response will be -- >> there's been withdrawn liquidity, but they've been cutting interest rates at the same time. >> absolutely. so i think what we're seeing here is a shift in policy. and we as asset managers have to try and figure out how that impacts european government yields and european credit markets. my sense is the next move from the ecb if growth weakens could be a dominant factor for credit spreads and could push them twice as still. >> allen, stay there. you're with us for the first part of the program and we're delighted to have you, let me tell you. michael schumacher's family at his bedside as they wait to discover the full extent of the injuries he suffered in a skiing accident. he's in a medically induced coma after an operation to reduce pressure on the brain. doctors would only say his condition is still critical.
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and authorities in north dakota are concerned a shift in the weather could increase the potential for health hazards after two trains collided on monday, setting off a fiery explosion. they're strongly recommending that residents of a nearby town evacuate. a bnsf train carrying crude oil hit the second train that had derailed. no injuries were reported. the nsf is inned by berkshire hathaway. this comes amid concerns about the increase of carrying oil on trains. two of europe's most dominant political parties has a third term while silvio berlusconi was convicted. here is a reminder of some of this year's political plays. ♪ >> this has been one of the
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tightest election races in the political history. a country that's used to wandering coalition running the show. >> this result calls for deep intro expect. we have to understand, to look at the many reasons for this defeat. >> breaking news from thailand, the prime minister says she will be dissolving parliament. >> no reprieve for silvio berlusconi. >> stunning victory for merkel over the weekend. her own party holding more than they've done in the last 20 years. >> i, kevin michael rudd --
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>> you're once more open to this. >> some of the political power plays particularly out of asia, as well. geopolitics is sort of the dog that didn't park. we got a little worried about the u.s., but took it astride, as well. >> it did park this year. it's just it didn't bite. geopolitics i think has faded to an extent into the background. we were talking about emerging markets and there's a lot of
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concern about how this has performed in the coming years. that was the focus in the developed world and hence off dpeeo political risks. yes, there are issues going on in the background. not in my view sufficient to destabilize the market. >> what is your view of china and the impact? we think the growth is going to be okay. we sort of played that theme this year. there was still huge concerns about the shadow banking sector. >> people are focused upon china for the last couple of years. i among many have tried to extrapolate how chinese growth and u.s. growth and draw the use upon the developed markets. this has been worked. it's quite clear. the main focus is in reaction to central bank policy, not reaction to economic environment. as a result, i think our attention next year should be on what will central banks do next
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in a much calmer environment? will forward guidance work? >> it's a secondary asset for investors in europe? >> it's a third order risk. i think first order risk policy, second order risk what's going on in europe. third order risk, china. i think one other thing that really differentiates 2014 from previous years, it's going to be a volatile year. the market is going into this year at elevated levels. i'm not going to say complacent. i think people feel very comfortable about the economic environment. too comfortable. we feel comfortable about central bankers and they perform very well in the last few years. that comfort could easily be broken and that's why the central bank have a perceived era, we'll come back and see -- >> we'll come back and look at
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the possible policy decisions they may take. still to come, we're going to talk tech winners and losers in 2014. what devices top people's lists? what gadgets fell out of favor? more on that when we come back.
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now, what did you get for christmas? yes, i'm asking the director. tech is set to be the festive winner this season with many people turning to the digital world for gift ideas. tom mckenzie has been taking a look at some of the most popular devices. >> the gadget show here in london is a mecca for tech geeks, showcasing everything from 3d printing to smart tvs. organizers expect around 30,000 people to flock through the doors and check out the hottest gadgets and gizmos for this holiday season. maybe these will make it into your stocking this year. a humanoid robot the size others in an organized league. fully modified versions could set you back as much as 5,000 pounds. and if that seems steep, why not build a robot yourself on this, a 3d printer that's on sale for 300 pounds? and if that's all too high tech for you, what about this?
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paper made from stone that you can write on under water. all well and good, but at this year's gadgets show, there were two companies that everyone was interested in. and in the green corner, microsoft. in the blue corner, tony. the battle lines have been well and truly drawn this year with ps4 hoping to take a chunk of the market share to prove you need far more than a tablet to have a decent gaming experience. over here, we saw the xbox 1. >> you will always have gamers who love something that gives more feedback and more control over game play. >> the thing like an xbox 1 as connected to the cloud as they are with ridiculous capability that brings to them, we're
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talking about super computer level number crunching for gaming. you can't do that on a tablet. >> so while analysts wait to crunch the sales numbers for consoles, there's a new industry making healthy inroads. >> the fitness devices are coming through thick and fast. .i think they're going to be one of the bigger shift in changes in 20 on 14. >> there's a lot of excitement around health technology with things like this providing metrics, blood pressure, track your daily activity on a wrist band, feed it into your smartphone or your tablet. and if you need a bit of peer pressure, you can send a tweet out to all your friends with your weight. >> do you think this is going to be on people's shopping list this year? >> oh, i don't know. i think some lucky people will be getting a nice vibrator for christmas. you see that?
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you see. >> i think we'll leave that there. tom mckenzie, our very own santa claus. sony is reportedly eyeing more job cuts as sales of televisions and other products have struggled amid south korean rivals. sony will seek voluntary environment from workers and hasn't set a specific target for the cut. the company shed around 10,000 jobs worldwide in the past year and a half. reed raftings is ringing out 20 is 13 on a high note. they're hiking the pay for its ceo by 60% next year. the salary bump comes amid a big jump in subscriber jump. netflix is ending a poison pill measure about two years early. adopted after carl icahn exposed a 10% stake since he since
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trimmed in half. in the new year, we'll see a number of changes in europe's 3 c3. richard will take over for roderic carr and there's change at lloyds where ingrid booel will become the ceo. ben van beurden is taking over for peter voser. now, the scotts apparently do it with balls of fire. people in chooil do it with their dead. yes, i am talking about celebrating new year's.
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there are many weird and strange way toes herald a new 12 months and some, the spanish stuff 12 grapes in their mouth. i don't think it's just the spanish. while peer in romania wear bears costumes. and the south africans apparently throw old furniture out of the window. it doesn't have to be new year's for that though happen. as the world prepares to bring in the new year, a different kind of bubbly is expected to fill up glasses in the uk. brit yap's biggest wine seller says prosecco has now taken over he two bottles of wine. there's an increase for italian sparkling whines. we would like to know what will fill your glass when you ring in the new year. if you want to join the conversation here on "worldwide exchange," e-mail us,
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worldwide@cnbc.com, tweet@krns wex or direct to me @rosswestgate. i have to say, allen, in our household, there's a great fondness for new zealand sparkling wine, which is exceptionally good value and exceptionally good taste. >> for me, it's going to be a cup of coffee at midnight i think to keep myself awake to drive home. >> drive home from new year's eve? >> i will indeed be driving home. >> oh, no. you can have an early evening. you can have a little sip of what will be your -- >> champagne. >> i think that's a very good idea. allen is going to have a bit of glass of champagne six or seven hours before he drives home, one glass, and i tell will be well under the limit.
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here is the question. it's been such a champagne year for the stocks, are we going to toast central banks in 2014 or be cursing them? >> so this is the key. as we go into next year, we know that the growth numbers are starting to look fragile. most particularly, the uk could come off as a worry in the second half of the year. only a minor worry, but nevertheless a worry. we could start to see slower growth in germany. in some of the weaker countries like france, that rebounds back on to the uk and germany. what will the ecb do next? is there the risk, given they can't cut rates further, they come up with policy, the kind of which will once again get markets moving? i think that's a very real possibility. >> you said they're withdrawing liquidity for the banking sectors. what are you talking about, going through their version of qe? >> well, we could work our way through the options.
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why would you do that given the sovereign debt crisis at least now appears to be maybe not past, but the outcome is known. they could buy peripheral debts. the option, therefore, is to start buying possibly debt, debt from banks, weaker loans, we could start to look at the possibility perhaps of creating an spv run by the government to take some of the -- >> it's to actually get involved in the economy because banks are presumably still not much credit in europe, is there? >> well, i think we have to say at this stage this is a very unlikely outcome given that the growth numbers are still sufficiently strong and i think the ecb about back off -- >> the last quarter was 0.1%. >> we're still improving. i think this is a radical policy to be considering.
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the markets may start thinking about it. if the markets only think about it, the ecb doesn't need to do it. as a result, you will see the stock markets rally and you will see credit spreads -- >> someone from the ecb has to mention it. no one has mentioned it yet. >> bear in mind the ecm and the omt, draghi has been very effective about mentioning the policy framework, never really using it, but that being enough to give the market -- did they actually ever -- is there a formal policy? is it something that is still just an idea as opposed to anybody legally drafting the -- >> i think the important thing to note here is that draghi has been very effective. he has made clear there are more policy frameworks than the market actually needs. he will do that again next year. >> all right. stay there. more to come.
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also, we'll hear from the former head of the ecb about his predictions for growth in the new year. find out what jean-claude tree hey has to say. everything looking good. ♪ velocity 1,200 feet per second. [ man #2 ] your looking great to us, eagle. ♪ 2,000 feet. still looking very good. 1,400 feet. ♪ [ male announcer ] funny thing happens when you shoot for the moon. ahh, that's affirmative. [ male announcer ] you get there. you're a go for landing, over. [ male announcer ] the all new cadillac cts, the 2014 motor trend car of the year.
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happy new year.
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stocks celebrate a stellar 2013. the dow at its 51st record high this year, the most since '95 while the nikkei is up some 57%. dollar/yen another big winner is on track for the biggest yearly gains, as well. fwoeld is set for its worst year in over three decades, down 28%. >> the german chancellor angela merkel is among those well wishers for michael schumacher as his family holds a bedside vigil following a operation following a serious brain injury. and in the united states, the latest in a string of accidents that had raised concerned about oil transportation by train. it is a truncated european session day today. german, swiss, irish, greek
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exchanges have already closed for the year. they did that last night. the ftse 100 is up 0.3%. the ibex is flat with all these markets will close today at lunchtime. and on the currency markets, dollar/yen holding on to the gains we've had made this year. currently just below the 105.41, but up 21% so far. the dollar against the yen. euro/dollar, is at 1.3772, just off its 26th-month high. we hit just below 1.39 on friday. cable, 1.6536 at the moment. not far away from the highs that we've hit the highest level since august 2011. we have some comments out from mr. klaus relling. he says spain exiting the bailout program is an impressive success and are working with spain to ensure full and timely debt repayment. that's mr. from regling.
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now, talking about europe, it's been over two years since jean-claude trichet left the ecb. since they've, we've had successful embarking on an ambitious program including forward guidance and the omt. trichet says despite the global economy, reforms at this remain key for europe. >> we are now glowing at the global level with could surprise necessary some advanced economies. and perhaps slowing down in some emerging economies. but we have so look at each economy on the basis of its own fundamentals. i think that all taken into account, it is a year which should be a year of doubt, of course. >> are you confident about the economic recovery in europe? >> i think europe has done a very, very hard work in it's adjustment.
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so the countries that we're under stress by markets. the five countries in particular that have been under very, very tough stress have recovered and they are now more or less balanced as the current account when they were highly in deficit in '09 or '08 or '09. so i think now we will be in positive figures. that's clear. it is what all would say international institutions are projecting, something around 1%. obviously, a lot of structural reforms remain the essence in europe nor the for the growth potential to be much more flattering. but we are now in figures, it's clear. >> how do you see the evolution of on monetary policies next year? >> i trust the central banks all around the world to be as, you know, respectful of their mandate as is required, by
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constitution as regards to the european central bank. it has remarkably delivered price stability without deflation and without innation over the first 15 years of the euro. the yearly inflation is around 2.03% or something like that as an average. so it was in line with the definition of fwt and what was required by the democrats in europe. and i trust the ecb to continue to do what is needed to avoid deflation and to avoid inflation. >> so they have started its tapering process. what do you think of the timing? >> this had been announced months ago and i think it was well done, obviously, because then all markets, all investors and savers in the u.s. and the
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world over were, you know, said very clearly it will be done. and, obviously, one cannot expect such extraordinary measures, such very unconventional measures to be continued. so i trust that it was very well prepared and preannounced and it must say on a personal basis, i am happy that it was announced by ben as it's been done yesterday. since 2011, european banks fill their balance sheets with sovereign on debt creating a doom/gloom effect. do you think we should be worried with the this situation? >> all commercial banks all over the world have considered privilege the treasuries and it is true everywhere. so i would say that in the particular case of europe where
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we were the epicenter of the sovereign risk crisis, it has to be followed very carefully. and i trust that transparency is the best concept to be applied. and i trust that it is what the ecb has in mind as regard its future role on supervision, transparenc transparency, make absolutely transparent all the treasuries that are in the balance sheets of the banks. >> do you think that the banking union in europe will provide enough support for the banking sector? >> the very concept is to decouple the creditworthiness of the banks and the creditworthiness of the states in order too void vicious circles that we have observed in the crisis. i take it that this is the goal. and i expect that that goal will be attained. but it's a work in progress.
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we have to say exactly how the single supervisory mechanism will function. and we just had an accord in the principle for the single resolution mechanism. i think it's very important because the devil can be in the detail. so we have to look at it very, very carefully. >> no 2014 a new set kwaut review in europe. what do you expect from this new he round of stress tests? >> two things. one is the asset quality review and the other one are the stress tests. these are two different exercise. one is, you know, you look at the assets and you judge the quality of the assets. the other one is what will happen if we had new stocks that would be devastating? what has been decided is to make public the result of both the aqr and the stress test in order
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to be sure that the market is fully informed and has a full fledge comprehensive information. >> jean-claude trichet speaking to stephane. we'll pick up on those comments with allen in just a few minutes. before that, bombardier has released a statement saying its new contract will be modernized on 40% of the underground network in london, which is good news for those ceus, the tube. and the chinese central bank chief says he's going to continue produced end monetary policy next year. the aim is to keep policy stable and continue reforms in the chinese central bank. let's get back to the comments from mr. trichet. allen, talking about banking, the idea is to separate the banks from sovereign.
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i didn't see anything so far that's been proposed that it's going to achieve that. >> no, i haven't either. and i think that's why the markets have continued to link the two. if you look at the performance of bank debt, it will be linked to sovereign creditworthiness. in many ways, i think we see this as the holy grail of the markets. which will be the game changer. i'm not convinced, however, that given that sovereign's perform is highly correlated with our own economy. banks performance is highly correlated. any reason why that linkage is going to get broken? >> and regulators have made sure banks have stuffed themselves with sovereign debt. the ecb has given them money to buy sovereign debt over the last few years. >> i think that's been the by-product of the recent policy framework. but i would still go back to where we were even, say, ten years ago, absence of any banking or sovereign crisis, i still think the correlation between them would be very, very
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good because they are normally heavy based and they're in domestic economies. >> pension funds to load up with as much, right? they are regulated to buy to match long-term assets and liabilities. >> pension funds is a very different animal and much less heavily regulated. pension funds have much less scope to buy assets and they have much longer time horizon. they don't have the liquidity constraints which banks have. >> nevertheless, as far ass the eurozone banks and the banking union is concerned, what we appear to have agreed is something that is a -- particularly in terms of resolutions, a single resolution funds, a single resolution fund in name only, it is what we have appeared to agreed is a national resolution funds which when you add them all up has become a single resolution fund.
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it's not what ecb wants. it's what jean-claude trichet would advocate. what it does highlight is the difficult of agreeing policy in europe. and i'm wondering what risks that has, if that gets worse, potentially, or just doesn't improve. >> well, here, i think the key focus lies away from the banking sector and lies with the -- next major selections, narrow actions in france. we know that lepenn is doing very, very well. we know the other rising parties have been doing well over the last year or so. what do we do after the european elections next year if we find the european parliament has a large number of appear tie european or should i say less pro european members? that will make the situation much than it is this year and, therefore, i would imagine getting policies through, reaching agreement could become a major risk. when does the market start to discount this? it's too early yet.
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i would imagine sometime by mid february the markets would start to focus on france, indeed. >> i'm focused on france. it's currently flirting with recession. and this is the core. >> france has been worrying us for a couple of years now. i think the main issue about france is national savings rate is so low, it's difficult for it to be a self-financing enterprise and in many ways it looks peripheral in the context of international savings rates. however, there hasn't been a catalyst which has pushed oet spreads out against puts or credits. in fact, over the last six months, actually, the french credit has performed in line with the uk and that doesn't stack up with the fundamentals. i think the key is what is the catalyst? and i think lepenn could be the catalyst. the french investors don't see it that way, but i think the international investors will. berkshire hathaway has struck a deal to buy a deal from
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philips 66. berkshire will pay around $1.4 billion in stock using 19 million phillips shares it owns. warren buffett says the system has delivered a strong financial performance consistently. hertz is adopting a poison pill measure following some unusual trading activity. the plan will go into effect if any group purchases 10% of its stock. it wasn't adopted in any specific takeover bid. hertz up around 58% this year. but still trails smaller rival avis budget which has nearly doubled. allen, we're looking at the car companies into autos, one of the best performing sectors for equities this year up from 38% with tech and media. how have they done on the credit
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space? >> in the credit space, it's a sector which hasn't performed in any special way whatsoever. the nonfinancials as a group have tightened. general think cyclicals have outperformed the non cyclicals. but the degree of outperformance has not been huge. if you look at the spreads, i.e. the wide names relative to tight names, that dispersion is quite high given the space in others. we would expect the wider names, the cyclical names to outperformance next year, all things being equal. >> the second best performer has been telecoms and media. these are sectors where we have seen huge amount of m&a. so are these names going to be issuing more debt or are they -- you know, how is that m&a activity going to feedback into credits? >> i think at the moment, the credit market is always blissfully unaware of the m&a
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risks. we're findful they could crop up next year or the year after. but the systemic risk in terms of ecb policy and macroeconomics is probably the main driver. it does, however, have a very big implication in terms of setting up portfolios next year. at the moment, pit the likely losers, five or six names, and make sure you're heavily underweight those losers and be long the market as a whole. spreads will tighten, but there's probably a few rat mines out there. >> i talked about high yields yesterday. i had a hedge fund manager last week and he said high yield is looking for a windshield. >> yes, i'm afraid i agree. the -- there's a big difference in my view between investment grade and high yield. investment grade has structural buyers. the pension funds, the yields rise and we're talking earlier, rates go up. you will see the pension funds move in and buy investment grade credit for its asset quality and it's performed very well in relation to sovereigns.
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high yields, however, is not structurally purchased by tension funds. the spreads are going tighter, but they have no structural demands. i think high yields, therefore, is at risk. as rates go up and you could see high yields which at the moment is at very, very tight levels, especially for some of the weak he names. >> you're taking on too much risk for clipping the coupons, basically? >> i'm not sure it's down to the risks. i think it's more who buys the products. investment grades, high yield is more of a speculative asset class. >> allen, stay there. if you have any thoughts or comments, e-mail us, world would it@cnbc.com. next year, 40% of the world's population will head to the polls, potentially changing the global political landscape. we'll take a look at what's in store for 2014.
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as the world prepares to ring in the new year, a different type of bubbly could be filling up groceriers in the uk. tesco says prosecco sales have now overtaken those of champagne inspect in 2013, one in every two bottles of sparkling wine
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were prosecco from tesco. we're asking you what would you -- what are you going to fill your glass with when you ring in the new year today? phil harper tweeted champagne for me real friend and real pain for my sham friends. join the conversation, world would it@cnbc.com, tweet @cnbcwex or direct to me @rosswestgate. nothing hristou for my producer, i understand. we asked ceo sammy bricker about the key as equities in the industry. >> what the business is looking at is are we able to deliver the jobs on time, on budget in order to guarantee the level of returns for our clients, like the bps or the shell or the conoco or others.
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and if you were able to do that, that's when you get a little bit higher payment from your customer because our portion of the delivery is maybe 5% to 10% of the total investment. that's so critical to the sectors of the budget. >> yours are benefiting from the u.s. renewables market. how is that developing? >> to remember a time when i came the to amec in 2006 and i found that the level of dependency in oil and gas is going be reduced going forward through new technologies and others. and i saw the possibility that renewables are going to be a big gain, especially for the u.s. so what we have been doing is positioned ourselves and it has been a great success for us. we have closed about 111 large jobs or made the jobs in the u.s. on solar and we have been building a lot of wind farms. we have delivered more than 40%
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of the wind farms in ontario. >> there's a huge debate about wind farms, not least in the uk. people resent them, the public sort of resend them unless they're a long way out to sea. is it going to be difficult for this industry to fulfill its potential? >> i think in some of the locations in the world, we need to respect, of course, the local communities. but also at the same time, we need to think about what is the best for the country and what's best for the nation? in the uk, there has been a lot of debates, whether onshore wind farm sess a good thing and now everybody is speaking about offshore wind farms. we need to recognize the offshore wind farms are much more than on shore wind farms. by that, the returns are going to be much lower. >> and they were positioned by the uk to do the first exploratory of how we might put a road map together towards developing share reserves in the
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uk. how difficult is britain from the united states? what are the problems here that they don't have in the united states? first of all, they're much more congested. >> yeah. the license and firm has been able to mix chemicals with the water when you do the hydraulic fracking. also in the u.s. people are getting excited about it because they own the mineral rights of when they own the land. that's not the case in the uk. >> yeah. >> you own maybe a slab of grass here. but also, you have thousand of entrepreneurs in the u.s. where they actually buy a couple of trucks and go out and do drilling. you don't have that in the uk. so there are a number of challenges and what the report says, it is technically environmentally feasible to do that. but the question is whether or
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not we should do it or not. >> do you think we will? i mean, it comes down to political will at the enof the day. >> there is a mix between political will and commercial will. if the company sees that they will not be able to get good returns, then they will not do it. >> sammy talking to me ahead of christmas. now, michael schumacher's family has been maintaining a vigil by his bedside to relieve pressure on his brain. doctors in ga know are currently giving an update on the seven-time world f1 champion. i want to see if we have any comments through from that press conference. i haven't actually seen anything as of yet. although the doctors treating yesterday refused yesterday to predict an outcome for michael
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schumacher. he's still in a medically induced coma and doctors have been focusing only on his current condition. we will keep our eyes on any comments coming out of that. let's get a final comment, then, from allen who has been with us for the first hour today. allen, the biggest risk for you, then, is what the ecb does? >> i think there are risk owes two sides. the risks at that time markets rally more than we think, that credit spreads go tighter than we think is probably on the ecb. if they're forced to take further policy which at the moment i think the market is not really discounting. so that's the positive risk. on the negative side, it's clearly the political framework. i think people know that one. that's not new. but it really emanates in france and it's a lot more proximate than people imagine. so i would say even by the end of january, early february, markets will be thinking -- >> and are we going to be swinging a lot around on data out of the u.s., as well.
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>> no, i don't think we will. i think the u.s., as they put it, has passed the escape philosophy. >> and we get stronger data than we saw and i think they might accelerate tapering. >> the u.s. has been the big driver for global markets. i don't think anything is going to change there next year. what i think had been very interesting is that the tapering arguments has driven european markets in 2013. yet, at the same time, the bank of england never tapers. it's the ecb who have been scaling back. this has not been noticed. motorcycles sense is that next year we look carefully at the european data to drive the markets. >> allen capper, from lois bank commercial blanking, thank you for that. still to come, 40% of the population head to the polls next year.
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you're watching "worldwide exchange." i'm ross westgate. the headlines today from around the globe, happy new year. stocks celebrate a stellar 2013. the dow in its 51st record high this year, the most since '95. the nikkei hosting a 57% gain. dollar/yen, that's one of the other big winners, on track of the biggest annual gain since '79. on the losing side, gold set for its worst year in over three decades, down 28%. and in other news, german chancellor angela merkel among the well wishers for michael
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schumacher as his family holds a bedside vigil. doctors currently giving an update. plus, a fiery train collision in the united states forces the evacuation of a small town. it's the latest in a string of accidents that have raised concerns about growing oil by rail traffic. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. if you've just joined us stateside, a warm welcome to you. happy new year's eve. michael schumacher's family has been maintaining a vigil at his bedside following an operation to relieve pressure on his brain. doctors in grenoble currently giving an update on the on seven-time f1 champion.
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yesterday they gave an assessment of his injuries saying he was still in a medically induced comma. as we get those updates, we will bring them to you. let's bring you up to speed where we stand on equity markets. the dow having its 51st high close for the year. that is a record. right now, we are currently 4 points above fair value. the nasdaq at the moment is some, what, 8 points above fair value and the s&p 500 is about a point above fair value. now, half of european equity markets are closed today. the dax, ireland, athens, the twis market are close. the ftse 100 is up 0.3%. the cac 40 is up 0.2% and the
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ibex is flat. shack high is up 0.8% on the last trading day of the year and the s&p 500 is fairly flat. that's today's session. what about where we've been with currently markets, as well? dollar/yen, 104.935. not far away from the 105.41 which was the five-year low we lit on dollar/yen just overnight or at the beginning of the week. dollar/yen up 21% so far this year. euro/dollar is at 1.3767 at the moment. remember, euro/dollar, 1 is.3894 is the 26-month high which we hit on friday. aussie is currently down some 15% this year and sterling/dollar at 1.6540. pretty much near the highest levels since august 2011.
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meanwhile, we have the latest press conference from michael schumacher. they're saying there's a slight improvement in his condition. they've performed a second operation during the night and they're now giving us an update on that. we'll keep you up to speed with that. let's show you where we stand with performances for the year. the dow jones industrial average up nearly 26% over the course of the year. we had the best year since 1996. the nasdaq is up some 37% for the year and the s&p 500 is up some 29%. outperforming some 22%. as far as european equities are concerned, the dax really having the best year up some 25%. autos, tech doing very well. the ftse weighed down by resources. resources, the worst performing sector in europe over the course of the year. the ftse as a result up around 14 had.5%.
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the dax up 25%. the cac 40 up 17.6% and the ftse mib is up 16%, as well. the dollar having its biggest gain since 1979. the shanghai is down 6%. hang seng up 2%. s&p s&p/asx up some 1r5%. that's just about wrapping that up. let's talk about dollar/yen meanwhi meanwhile. up some 21% this year. as far as euro/dollar is concerned, i will show you what that has done, as well. up some 4% for the year. and gold having its worst annual loss since 1981 is. down some 28% during the course of the year. what's on today's agenda in the united states? the october s&p case-shiller home price index is out at 9:00
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a.m. eastern. at 9:45, we'll get the december chicago pmi and at 10:00, it's december consumer confidence. forecasts are calling for a reading of 76.8, up nearly 6 points from last month. the next year sees india and brazil hold nationwide general elections. do they have the potential to change global dynamics in 2014? i asked daniel frankfurt, executive editor of the economist. >> indonesia is another one, a quarter of a billion people there. so new leadership coming in there. and in india, i think there's a hugely controversial figure, but business wants him because he's got a reputation for getting things done where he -- >> that's a big thing for investors in india, somebody that can deliver. >> the system is clogged up. illustrate needs unclogging.
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but the european elections, the elections for the european parliament, usually the most boring things in the world, they're going to produce some shocks. obviously here in the uk, but also the national front in france and an alternative for germany. so i think that's -- in may, that will cause ripples throughout europe. >> it will be interesting to see whether that has any impact on whether we can get europe to be more competitive and implement more of a single market. >> that's the run up, if you like, to britain's tonight to renegotiate its terms of entry and they'll certainly by a lot of soul searching in europe after those elections. >> what about brazil? they're going through a difficult patch after the last set of elections. they're almost on the edge of slightly squandering. >> i think that's the real danger. we will very bullish on brazil and the economist and our latest
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special report on brazil was rather sober about it. as you were just saying, a big year in brazil in other ways, too. the president will be hoping with that. they do well on the field and that tournament goes very smoothly and that might give her a boost. but she's going to face, i think, quite a tough challenge. she'll probably get elected and the real question in brazil is whether they can unclog some of the bureaucracy. >> and about whether the tournament goes smoothly. they've had all these disruptions of sort of the pretournament tournament. >> and some groups are determined to use the fact that the world's attention will be on brazil to demonstrate again. but i think it will go smoothly and it is after all the home of the beautiful game. >> what's matt damon doing in your -- >> he is very interested in the problem of water worldwide. and he writes about getting safe water to millions of people around the world. and he thinks that the world -- at least should focus on that.
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interestingly, he talks about smart philanthropy, bringing in business rather than being in conflict with business can help solve that problem. >> one of the other things i think you do every year is you predict what's going to be some of the fastest growing economies. >> china, for the first time since we've drawn up that list falls out of the top dozen fastest growers in 2014. so for spectacular growth, you have to go to exotic places like south sudan whose economy might grow by 35% or more next year. so a little bit of a boost there from oil can help it grow spectacularly. >> that is a real frontier. >> real frontier. other places, places like countries recovering from war like iran. >> those are the economist look haeft to 2014. we just had a press conference
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at the hospital in grenoble, treating the former seven-time f1 world champion. they're saying they've seen a slight improvement in the condition. there are some signs that the condition is more under control now. a bnsf train carrying crude oil hit a second train that had derailed. no injuries were reported. the accident comes amid heightened concerns about north america's increased reliance to carry oil. in july, 47 people were killed when a run away train crashed in a small town in quebec. when we come back, we'll speak to a guest who sees both equities and the vix ranging
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higher in 2014. how will investors make the most of that? we'll get into it right after this. bny mellon combines investment management & investment servicing, giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world.
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bny mellon.
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now, the scotts do it with bowls of fire. people in chooil do it with their dead.
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of course, i'm talking about celebrating the new year. there are many ways of celebrating the new year. apparently the spanish shove 12 grapes in their mouth. i've seen that a number of times. romanians wear bear costumes. and the south africans and the italians throw furniture out the window. as the world prepares to ring in the new year, there is a different kind of bubbly ringing in the uk. tesco says prosecco sales have overtaken those of champagne in 2013. one in every two bottles of sparkling wine sold at tesco was prosecco. we've been asking you what are you going to fill your glass up with to ring in the new year? brett glasgow treats, is jim beam a champagne? if not, oh, well, 2014, i'm bringing it in this right way. nothing wrong with a bit of
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bourbon. join the conversation on "worldwide exchange." e-mail us, worldwide@cnbc.com, tweet@kr tweet @cnbcwex or direct to me@wrg rg. doctors say miemal chumacher's condition has improved slightly after a second operation. and some of the best offers of the year at the lexus december to remember sales event. this is the pursuit of perfection. ♪ [ male announcer ] the parking lot helps
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[ male announcer ] this december, experience the gift of true artistry and some of the best offers of the year
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at the lexus december to remember sales event. this is the pursuit of perfection. u.s. equities are called slightly higher. the dow currently called up 4 points. the nasdaq called up 4 points, as well. its had its best year since 1996. the s&p had its best year since '97. all four quarters this year, 1997 is the last time that happened, as well. the nasdaq up some 37% for the course of the year. european equity markets are closed today. these are the main ones that are open. the ftse is up about 0.3% with
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gains this year around 15%. the cac 40 is up 0.25% and the ibex is fairly flat. the dax closed yesterday with 26%. the irish and greek markets up 34% and 28%. the swiss markets closed today with annual gains around 20%. meanwhile, it's been over two years since jean-claude trichet left the ecb. since then, we've seen mario draghi on an ambitious program. trichet says despite the global economy moving forward, structural reforms are still key for europe. >> we are clearly now, again, of course, at the global level with good surprises in some advanced economies. and perhaps slowing down in some emerging economies. but we have to look at each economy on the basis of its own
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fundamentals. i think that all taken into account is a year which would be a year of doubt, of course. >> are you confident about the economic recovery in europe? >> i think europe has done a very, very hard work in its adjustment. so the countries that were under stress by markets, the five countries in particular that have been under very, very tough stress have recovered and they are now more or less -- the current account when they were highly in deficit in '09 or '08 or '9. so i think that now we will be in positive figures. that's you clear. it is what all would say international institutions are projecting. something around 1%. it's not brilliant. obviously, a lot of structural reforms remains of the essence
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in europe in order for the growth potential to be much more factoring. but we are now in that figures, it's clear. >> how do you see the evolution of monetary policies next year? >> i trust the central banks all around the dmoebl world to be as respectful of their mandate as required, by institution, as regards to the european central bank. it has remarkably delivered price stability without deflation and without inflation over the first 15 years of the euro. the yearly inflation is around 2.03% or something like that as an average. so it was in line with the definition of price stability and what was required by the democracies in europe. and i trust the ecb to continue to do what is needed to avoid deflation and to avoid
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inflation. >> so it started its tapering process, what do you think of the timing? >> this had been announced months ago. and i think it was well done, obviously, because then all markets, all investors and favors in the u.s., the world over, were, you know, said very clearly, it will be done. and, obviously, one cannot expect such extraordinary measures, such very unconventional measures to be continued. so i trust that it was very well prepared and preannounced and i must say on the personal basis, i am happy that it was announced by ben as it's been done yesterday. >> jean-claude trichet talking to stephane in paris. our next guest expects equity markets to range higher in 2014, but in a very different format
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from this year. joining us is michael pervis. michael, good to see you on this last trading day of the yoeear. it's been quite some year. the nasdaq up some 37%. what's going to happen in 2014, michael? >> well, i think we're going to get more of the same. i think we'll put in another strong year here, but it's going to be different than we saw last year or in 2012. in those years, the markets were defined by multiples expanding amid the coming out of the shadows of that 2011 risk off. going forward, i think prices are going to range much faster than fundamentals will be able to keep up with them. but there's a reason for that, which is that really it's the largest asset reallocation probably known to man is happening right now of fixed income into equities. that's going to keep markets overextended for some time. it changes the nature and the
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sort of the feel of how these markets will trade next year. >> that's your point about flows. there's going to be this fundamental dynamic supported from flows. but what happens as the bernanke put fades? >> right. equities will range higher. but the volatility will increase the nature, as well. that's the volatility of a flow-driven market. you've just seen time .time again, when money wants to find a home as it will in equities, the trading character will change. that's really what i think is going to be defining next year. there are -- the fundamentals are not horrible for equities in the i'd. they're just not -- they're just not going to be able to appreciate at the same rate that the prices will. >> the other side to the equation is to look at what earnings can do to justify the valuations we're currently
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putting on that. what needs to happen? >> well, ultimately, for earnings to really sort of, you know, surprise to the up side, we need, really, revenue upside. which means we need nominal gdp upside surprises here. i just don't think that's going to come. we talk about this bernanke put. i would argue there's something called a bernanke or maybe now a yell.short call. what i mean by that is that as the escape velocity metrics starts developing in the economy, that's only going to put much more pressure on interest rates which will, ip turn, dampen the escape velocity economic metrics. we saw this happen last summer in spades. and i think it will happen, since that dynamic is continuing to play. so i think earnings visibility is high. but i think the upside expansion or the upside surprise potential
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is really kind of limited. so, you know, at the end of the day, as i was saying, the fact that upside is limited here will be overwhelmed by this massive reallocation of assets. >> and what is also going to be the impact? we got treasury yields up at 3% at the moment if they continue to climb higher because the economy is improving. where is the -- where is it where it becomes a hurdle for equities? >> well, i mean, i think every dip higher interest rates climb is in some ways a negative for most equities there. but, you know, my upward target for a ten-year treasury yields is 3.75% next year, which is roughly in line with consensus. i don't think it's going to be stroi equities. it's going to be providing a -- you happen, a steady headwind. and it occurs across everything
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from, you know, housing recovery to also, you know, how much synthetic earnings are going to be generated by companies, like we saw apple last year increase and buy back stock. the models are sensitive to two things, the rise in interest rates and the rise in equity prices. all those factors are going to come into play here and they will weigh on the fundamentals. but, again, the higher interest rates, while they provide a headwind into equities, they're scarier for fixed income investors and that's going to be for fixed income investors, when we start seeing this good news is stronger news, you'll start seeing fixed income investors getting more worried than equity investors. >> michael, wooep we'll come back to you. stay with us.
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this is "worldwide exchange." happy new year. the dow closes at its 51st record high in years, the most since '55. dollar/yen, one of the other big winners on track since '79. on the losing side, gold suffers
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its worst year in three decades, down 29%. doctors treating michael schumacher says he is showing signs of improvement following a second operation. and a fiery train collection in the u.s. forces the evacuation of a small town. it's the latest in a string of accidents relating concerns about growing oil by rail traffic. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. hello. you are watching the final "worldwide exchange" for this calendar year. over a million revelers are expected to descend on times square to ring in midnight tonight. joining us is sara who is in times square. sara, how are preparations
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going? how is it all looking down there? >> preparations are starting to look real good. we're starting to see a couple of people trickle in. we're talking about is million people expected to pack into this area to see the ball drop. another 1 is billion people expected to watch it on tv. it's got 2,600 updated tiles by waterford this year. it includes one special tile designed by a patient at st. jude's. she designed a crystal that represents hope and strength, very fitting for the start of a new year. we're expecting people from all over the world to attend at the stroke of midnight. not only are they going to drop that ball. they're going to release a ton
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of confetti. one ton of confetti. some of it is extra special. international visitors have been encouraged to write their wishes for the new year on scraps of paper and those straps of paper will be among that confetti that descends on this crowd of resolvers come midnight. we've seen security sweeps under way. we're expecting rooftop controls, bomb sniffing dogs as well as plain closed detectives. they're going to blend right in with those million people crowd that is expected to attend here tonight. back to you. >> sara, we wish you all the best. thanks very much. have a great new year's eve. global equities, meanwhile, have been a little bit flat today. there's a lot of markets that have closed already for 2013. the ftse cnbc global 300 has been flat.
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u.s. equities are indicating slim gains. the fass dak is currently around 8 points above fair value. the s&p is about a point above fair value. the german and swiss markets have closed. the uk is up 0.25% on the final trading session. it's a half trading day in europe. the ibex and spain down around 0.1%. meanwhile, the u.s. dollar continues to make fresh five-year highs against the yen. potential further easing from the bank of japan as it pursues a 2% inflation target might drive it even lower in the new year. joining us with these thoughts, still with us is michael ferbis. michael, let's kick off with you, first of all. the dollar is/yen, what do you
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think happened in 2014 snch. >> we think next year it will move even higher. we're forecasting by tend of next year, it's probably going to be going up towards that 120 level. really, because next year we'll have the contrast between the tapering and the bank of japan, if anything, may have to ease its policy even further in 2014. >> okay. that seems to be an easier call than maybe what happens with euro/dollar. >> euro/dollar, bearish going into next year. we think in 2014 the ecb is going to be much more active. so they're likely to be cutting the rates again, cutting the deposit rates and it's thought eventually the deflation risk is going to have to pursue qe.
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it will be weighing on eu euro/dollar next year. we're looking for 1.23 by the end of next year. >> why has the euro been so strong this year against the dollar? >> one thing we've seen particularly in december is there's been a tightness of liquidity in the euro money market. part of this is because the excess liquidity in the eurozone system has been declining. but what i think has been really important and perhaps missed the last couple of days is that the amount of excess liquidity has jumped hugely. so their operations, it is pretty -- for s&p purchases, the amount of excess liquidity in euro money markets has doubled in recent days. this should ease some of that down in the new year. >> so the key driver here, though, michael, as i understand it, is going to be yields and yield differentials, right? >> throughout the year, yes,
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yes. through 2014, that's going to be one of the key drivers. >> and the dollar in general getting stronger. michael per advice is with us. michael, if the dollar is getting stronger against the yen and the euro, how is the stronger dollar seen feeding through into an equity strategy? >> well, it's interesting. if you look at the dxy, it seems like the 811 is level has been some level of resistance from it. and the other michael is correct, perhaps it will get stronger next year and that's going to certainly lead into the whole issue about whether large caps versus small caps, you know, start seeing more divergence with foreign earnings getting repatriated as small caps may be a beneficiary and gets to, you know, if you have
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currency exposure and if you have commodity exposure, it may impact in sector dynamics, as well. there is one point i wanted to mention on the dollar/yen. speculative positioning, what is interesting right now, and i would agree with your other guests on the trajectory of the dollar/yen here. but it's interesting to point out that the speculative positioning today is much more aggressively bearish than it was back in may when we had that big volatility at the end of the secretary quarter. so i'm wondering whether we get some big volatility starting to move at some point if we do see a massive short covering at some point on this voyage higher in dorm/yen. >> let's get michael's view on that. >> yeah. they are pointing the bearish positions in the yen remain.
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we have a metric that looks at a broad range of positioning. when you look beyond to see the type of investor webs you see positioning in the yen appears to be much like the hedge fund community and the real money community. so we think there is some scope for investors to put back on long dollar/yen positions as we head into the new year. >> michael, thanks for that. happy new year to you, michael purvis. stick around. final comment coming from you. meanwhile, berkshire hathaway struck a deal to buy a business from philipps 66 that makes chemical toes improve the flow potential of oil and gas pipelines. berk share will pay around $1.4 billion in stock using 189 million in shares it already owns. warren buffett says the system has consistently delivered a strong financial performance. phillips 66 edged up around
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0.25% in after hours. hertz is adopt ago poison pill measure following some unusual trading activity. the car rental company says the plan will go into effect if any person or group acquires 10% of its stock. the measure wasn't adopted in response to any specific takeover bid. shares of hertz up 2.3% in after hours, closing at $26.50. it's been up around 58% this year. but still trails smaller rival avis budget which has nearly doubled in price. still to come, we're going to talk tech winners and losers in 2013. what devices were atop of people's lists and what gadgets fell out of favor? [ male announcer ] the wright brothers started in a garage. amazon started in a garage. hewlett packard, and disney both started in garages. mattel started in a garage. ♪ the ramones started in a garage.
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my point? you never know what kind of greatness can come out of an american garage. introducing the 2014 motor trend car of the year. the all new cadillac cts. ain't garages great?
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tech loose to be the big winner this christmas season. tom mckenzie has been taking a look at some of the most popular devices. the gadget show has been a big winner this hot holiday season.
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showcasing everything from 3d printing to smart tvs. organizers expect around 30,000 people to flock through the doors and check out the hottest gadgets and gizmos for this holiday season. maybe these will make it into your stocking this year. a humanoid robot the size others in an organized league. fully modified versions could set you back as much as 5,000 pounds. and if that seems steep, why not build a robot yourself on this, a 3d printer that's on sale for 300 pounds? and if that's all too high tech for you, what about this? paper made from stone that you can write on under water. all well and good, but at this year's gadgets show, there were two companies that everyone was interested in. and in the green corner, microsoft. in the blue corner, sony. the battle lines have been well and truly drawn this year with ps4 hoping to take a chunk of the market share to prove you need far more than a tablet to have a decent gaming experience. over here, we saw the xbox 1.
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>> you will always have gamers who love something that gives more feedback and more control over game play. >> the thing like an xbox 1 as connected to the cloud as they are with ridiculous capability that brings to them, we're talking about super computer level number crunching for gaming. you can't do that on a tablet. >> so while analysts wait to crunch the sales numbers for consoles, there's a new industry making healthy inroads. >> the fitness devices are coming through thick and fast. i think they're going to be one of the bigger shift in changes in 2014. >> there's a lot of excitement around health technology with things like this providing metrics, blood pressure, track your daily activity on a wrist band, feed it into your smartphone or your tablet. and if you need a bit of peer pressure, you can send a tweet out to all your friends with
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your weight. >> do you think this is going to be on people's shopping list this year? >> oh, i don't know. i think some lucky people will be getting a nice vibrator for christmas. you see that? you see. >> oh, he needs some work, cnbc's tom mckenzie. talking about sony, it's reportedly having more job cuts in its sales of televisions and other products have struggled amid competition from south korean rivals. it hasn't set a specific target for the cut. the company shed around 10,000 jobs worldwide in the past year and a half. read hastings is ringing out 2013 on a high note. netflix is hiking the pay for its ceo by 50% next year to $6
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million. the salary bump comes amid a big jump in subscriber growth and ahead of popular shows such as house or cards and orange is the new black. netflix is ending a poison pill measure about two years early. it was adopted last year after carl icahn exposed a 10% stake in the firm which he's since trimmed in half. netflix shares have quadrupled over the course of the last year. and the new year will see a number of changes in europe's c3. richard will take over for roderic carr as chairman of the centrica. at lloyd's, ingrid beale will take over as ceo. ben van beurden is taking over for peter voser.
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finally, we search for a new head at microsoft is still going on. now, the scotts apparently do it with balls of fire. people in chile do it with their dead. yes, i am talking about celebrating new year's. there are many weird and strange ways to herald in a new 12 months. some are rather more peculiar. the spanish stuff 12 grapes in their mouth. i don't know whether they try and talk when doing that. people in romania wear bear costumes. and the south africans apparently throw old furniture out of the window. different traditions we have. president obama's health insurance program has made it through first test, the initial signup period that was marked by technical glitches and then a surge of enrollment. but with the new year has more hurdles to clear.
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hi, bertha. >> good morning, ross. 2014 marks the first official year of implementation of the law that's known as the patient protection and affordable care act. it's going to ensure that americans can no longer be denied health insurance due to pre-existing conditions. it requires them to obtain health insurance. all those laws go into effect tomorrow. at least 2 million people have signed up for private insurance plans, either through federal or state exchanges according to official or unofficial data. that's well short of the 3.3 million the obama administration projected it would enroll by december 21st. with three more months to go, experts think millions more may sign up. certainly now it's going to be more difficult to engage chemical with no real pressure until the march 31st deadline. here is what what will start happening over the next few days. tomorrow, people who have enrolled obama care by the deadline will learn whether they
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are actually covered. insurers have continued to receive applications with errors in them, missing information about individual enrollees or multiple enrollees. it's unclear how many applications are affected by those measures. january 10th is the extended deadline when insurance premium payments are due for that coverage to on kick in. in many cases, insurers will retroactively start the coverage to the 1st. some states that are running their own exchanges are allowing customers to pay through january 15th. insurers are reportedly scrambling to finalize hundreds of thousands of those last-minute applications as they continue to deal with the fallout from the tech issues that marred the initial launch of healthcare.gov. some complain that they don't have enough staff to address the issues.
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open enrollment officially ends on march 31st. anyone without health care has to pick a man by then or face a fine, which when they file their 2014 tax return. the penalty is $95 at least, but more likely 1% of taxable income. it jumps to $325 at a minimum in 20116 and $695 at a minimum in 2016. it's a very big change and certainly a rocky one. now what is going to happen when people present themselves with their coverage, whether or not the paperwork has gone through? that's going to be the first big hurdle for a lot of folks. listen, if i don't see you, happy new year. hope you enjoy it. >> happy new year, bertha. earlier, before we came to you, i was talking about all the weird things people do around the globe.
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what happens in the coombs household? >> this year, i expect i will be asleep. but my family is cuban and usually you eat 12 grapes to commemorate the 12 months that past, the 12 months to come and usually we drink champagne. or my mom doesn't drink and has sparkling cider. >> you are spanish. i didn't know that. >> i'm cuban. there's some spanish blood back there somewhere. >> that would be the 12 grapes issue. do you speak when you do that? >>. [ speaking foreign language ]. >> happy new year to you. thank you for that. meanwhile, a recap of the headlines. stocks ring in the new year with record performances. the nikkei the big winner with a 57% gain. the yen and gold are the big losers for the year, suffering the worst annual losses in a
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decade. and doctors say michael schumacher's condition has improved slightly following a second operation. welcome back. how is everything?
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[ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex. in other parts of the world, they're getting ready to ring in midnight, particularly in new zealand. european equities, meanwhile, nearly half of them are trading today. we've had markets close in likes of germany, greece, ireland and switzerland. so it's just london, france and spain still trading at the moment. there we go. london is up 0.25%. the cac 40 is up 0.3%. the ibex is fairly flat. final thoughts now from michael pervis. michael, you've said you expect
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a flow higher in the markets. what's a big risk for you in 2014? >> i think the biggest risk here is that interest rate volatility expands much faster than it has been lately. and that kind of upsets this delicate exiting from this aggressive quantitative easing strategy that the fed has done. that or, you know, any sort of deflationary shocks we may see. you know, it's hard to really visualize things, but you never know if we get a geopolitical scare in the middle east that spikes oil prices and that in turn flows into the japanese economy and that is throughout the world. but right now, you know, relative over the last six years, you know, the macro risk horizon is pretty limited right now. so i think visibility is pretty high. but, again, as we talked about, the upside surprises are going to be very limited. >> michael, great to see you. happy new year tonight. have a good day tonight and a
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good day tomorrow. that's it for 2013 on "worldwide exchange." "squawk box" is up next and about to welcome in the new year in new zealand. celebrations are beginning around the globe. d beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon.
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good morning. the final day of 2013 is upon us. getting ready to ring in the new year again. seems like we just did this. and we have one more trading day left to go. resident necessary a small north dakota town are being urged to evacuate after a train collided into another and no injuries have been reported. and the east coast may ring in the new year with a big snowstorm. it's tuesday, december 31st,
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2013. "squawk box" begins right now. you are looking at a live shot from auckland, new zealand right now where they are about to celebrate in just about four seconds, three seconds, two seconds, one second, the new year. we have another 18 hours to go, though, before the bell drops here in times square. good morning to you and welcome to "squawk box" right here on cnbc. i'm andrew ross sorkin along with -- there it is. beautiful. i actually was there years and years and years ago on the top of that tower there. but, anyway, happy new year, everybody. our top story this morning, a massive oil fire in north dakota, as many as 20 train cars carrying crude exploded and caught fire after a 1112 car train carrying

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